Many smart left-liberals would like the United States to be more like Denmark. But the secret of Denmark’s success in reducing inequality is that Danes are free to emigrate to a wide array of affluent countries with ample job opportunities, generous social protections, and relatively low taxes thanks to EU membership.
And so the most enterprising Danes, the kind who are mostly likely to disturb Denmark’s hard-earned Gini coefficient by hoarding enormous piles of cash, leave home for greener pastures. Much the same happens in Canada, where the brain drain has siphoned off hundreds of thousands of women and men who would otherwise become a serious social problem: by earning and saving large sums, they would shatter the delicate social balance and presumably cause riots in the streets.
So the ultimate solution to America’s inequality problem might be for Canada to pull an Ireland and leapfrog over the US economically by slashing taxes and opening its borders to American tax refugees. Somehow I find this scenario unlikely. An independent Vermont would likely have steep taxes and strict immigration controls, the better to keep highly aggressive Flatlanders from stealing all of their maple syrup.
If America does indeed get serious about solving the inequality problem, some Americans will likely leave for exotic locales like Singapore, but most won’t have the realistic option of exit. The solution will thus require extensive reeducation programs (“Leisure is good!”) designed to curb levels of entrepreneurship the new regime deems pathological.
The article on Denmark’s brain drain contains two noteworthy passages that are closely related.
But today young Danes can easily choose not to pay for the system’s upkeep, once they have siphoned off what they need. For starters, as citizens of the European Union they are entitled to work in any of the 27 EU countries.
This implies that the young Danes are cheating the system. Perhaps they are; after all, it is built on a high level of social trust that at least in part derives from homogeneity, or rather broadly shared cultural norms.
But the high taxes, mixed with his [Spanish] wife’s discomfort in Denmark, meant that a job offer in Qatar three years ago was all it took to pry him away from Copenhagen. Now, he is ensconced in Frankfurt, setting up a new business on the side and planning to pay no more than 25 percent of his income to the German state.
Those shared norms can be pretty stultifying, but of course they are part and parcel of the apparatus of redistribution. I sound like a broken record, but I have to emphasize: there are tradeoffs in life and in politics. You want diversity and solidarity and income equality and openness and flexicurity and dynamism and rapid growth and economic security and …? Good luck.